Taxman 💸
Tariff walls, More fines, and Shein makes a comeback.
🗓 Morning, folks!
We blinked, and February is here.
📉 Markets were energized with the Budget buzz, sending Nifty and Sensex up over 1% for Saturday’s special trading session. We may finally have our turnaround catalyst.
📊 Across the world, U.S. markets are bracing for a rough Monday open, as investors weigh another uncertainty in Trump’s new tariff plans. S&P futures were down 1.75%.
💡 Spotlight: India’s electronics manufacturing sector is on track to double to $200 billion in the next 3–4 years, boosted by govt. incentives and supply chain shifts out of China.
Let’s hit it!
1 Big Thing: Taxman gives middle class a break 💸
It’s been impossible to avoid Budget chatter this weekend, and for good reason.
To grasp the full context, rewind two days. For nearly eight months now, the Sensex has moved sideways. The India manufacturing boom hasn’t quite taken off yet.
Coldplay concerts may seem packed, but the state of the broad consumer is shaky. Jobs are scarce. Bureaucracy feels heavier than ever.
To top it all, a new U.S. regime, prolonged high interest rates in the West, and uncertainty about how long they’ll stay that way.
So, how do you supercharge the economy, without cutting interest rates and risking higher inflation, or without handing out freebies?
Somehow, it appears, they managed to find balance. FM Nirmala Sitharaman focused on tax relief, continued infrastructure spending, and carved out room for innovation — all while keeping a tight grip on fiscal discipline.
Here’s a quick round up of the most notable moves:
Personal taxation overhauled: minus technicalities, income upto 12 lakh will draw no income taxes in India, up from ₹7 lakh. More savings = more feel-good consumption.
Infra spending held steady: India will spend ₹11.2L crore (~$130 billion) on capital expenditures (think roads, bridges, railways, power, etc.) for the next year. Great, but not a huge growth vs. last year.
Air infrastructure to be expanded: regional airport development will accelerate, targeting 120 new locations.
AI enters the budget: AI, semiconductors, and electronics manufacturing receives a boost. National AI compute facility with nearly 19,000 GPUs will be set up, could cost nearly $350 million via some rough napkin math.
Nuclear and Clean energy boosted: nearly ₹20,000 crore will be allocated to the Nuclear Energy Mission, which will focus on developing Small Modular Reactors. The government is doubling down on domestic solar and EV battery production as well.
Healthcare and education expanded: The government is expanding medical education with 10,000 new seats in medical colleges this year, working toward 75,000 new seats over the next five years.
There’s a host of other measures, from urban development schemes to new tax breaks for pension funds and gig workers to defense and export related incentives.
Here’s a pretty neat summary from the kind folks at ET!
Bottomline: its moot to debate the effectiveness of the moves. We’d defer to the markets to judge. Investors taking Nifty 50 up 1% on Saturday gives you a hint into their verdict.
But the real win is a shift in sentiment. The market sees government's ability to think bold, which signals confidence.
What to watch out for: just as things were settling, Trump kicked off a 25% trade war on China, Mexico, and Canada, which could derail the western market rally. Much needed rotation into India stocks?
2. Quick IPO in focus 🚀
WeWork India, the shared office space renter, which operates under a franchise-agreement with WeWork Global, has filed preliminary papers with SEBI for an IPO.
If you’re totally new to the story, WeWork launched in India somewhere around 2017, and leases Grade A office spaces across Tier 1 cities.
What’s new: the IPO comes months after WeWork Global filed for bankruptcy, weighed down by $15 billion in debt. The Indian unit, however, has turned things around—posting a ₹174 crore net profit in Q2 FY25 after losses in previous years.
The issue is an Offer for Sale (OFS) of 4.37 crore shares. Promoters Embassy Buildcon and investor 1 Ariel Way Tenant will be offloading their stake.
Big theme: India’s co-working sector is projected to reach ~$3 billion by 2030, growing at a 7% CAGR. Not quite the beast, but a reasonable operation favoring notable brand names.
3. Mota bhai brings Shein back 👗
Shein is back in India, but this time, Mota Bhai is calling the shots.
Nearly five years after being banned, the fast-fashion giant will try to rework its old magic, supported by the full might of the Reliance consumer machine.
Context: Shein was among the 300+ Chinese apps banned in India in 2020, along with TikTok and PUBG, due to data security and geopolitical concerns.
For round 2, Reliance has secured a licensing agreement that allows it to use the Shein brand name for a fee. Reliance fully controls the platform, supply chain, and all customer data. All products will be made in India.
Big picture: India’s fast fashion market was valued at $9.9 billion in 2023 and is projected to hit $28 billion by 2030. The glamour and shine peddled on Instagram is addictive, boosting trendy yet affordable fashion.
Worth noting: Shein is pushing for a London IPO after dropping U.S. listing plans due to regulatory scrutiny.
4. New day, new agenda 🏗️
Donald Trump slapped tariffs on all U.S. imports, with China facing a 10%, while Canada and Mexico get hit with an additional 25% tariff.
Markets aren't too thrilled. American automakers rely on Canadian and Mexican parts, and over 60% of imported vegetables come from Mexico.
If supply chains are disrupted, price spikes could be seen across industries.
The counterpoint: U.S. consumer is responsible for nearly 30% of global consumer expenditure, which could in fact compel serious businesses to start investing and building factories locally, exactly what Donald Trump hopes for. Automakers, semiconductor makers, electronics producers and more have already been making moves.
Meantime, Canada and Mexico both retaliated, with Canada slapping tariffs on $105 billion worth of U.S. goods.
Global trade is in for a shake-up.
What else are we snackin’ 🍿
✈️ Air India fined: DGCA fined Air India ₹30 lakh for allowing a pilot to fly without meeting regulatory requirements.
🤖 OpenAI’s mini: OpenAI launched a new "mini" AI model, promising better reasoning at a lower cost, following DeepSeek’s disruptive debut.
💸 UPI Hits Highs: UPI daily transactions rose to 14.3 million in January, with a ₹19,562 crore daily transaction value.
⌚️ Pay up: Apple will pay $20 million to settle a class-action lawsuit over battery swelling in the Apple Watch.
⚖️ Tax fight: Volkswagen is suing Indian authorities over a $1.4 billion tax demand, calling it unfair and damaging to business.
That’s a wrap! Don’t let the Monday scaries get to you.
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Hit that 💚 if you liked this issue.
Didn't Nifty close negative on Saturday?